(GREECE) – So Greece has a government. A three-party, left-right coalition with a commitment to change agreements European leaders claim can’t be changed, reform an economy that no one has been able to budge for decades and find a pathway to growth that no political leadership in Europe or the United States has been able to articulate, let alone gain consensus for. But doubtless failure will be attributed to the crazy Greek character.
Misreading the results
The quick description of the results was often to the effect that “Greeks chose to stay in the Euro, Europe breathed a sigh of relief, and markets rallied in response.” Perhaps some thought that way and there was some sort of temporary blip in the markets. However, as I wrote last time, this is not what Greeks appeared to think they were doing. It would be more accurate to say they thought they were punishing those who got them into the austerity trap, declaring their intent to stay in the Euro and demanding a renegotiated bailout agreement.
Radical right and old left
Before discussing the new government, it is worth looking over the results in more detail. Both the old far left and the new far right did not gain, reducing fears of a surge of extremist parties leading to some sort of fascist government.
On the right, the two parties that cause concern are Golden Dawn and LAOS. Their combined share of votes fell from 10 percent in the May election to 8.5 percent in June, further suggesting that they are a protest vote rather than a vote for extremism. Additionally, one key difference is that in Greece, as in many European countries, the center right and center left firmly repudiate their extremist elements, unlike in the United States where extreme rightist elements enjoy a closer relationship with mainstream right groups. This rejection went so far in Greece as to have parties state they would simply refuse to serve in any coalition that included the radical right parties.
On the left is the old-line Communist party (KKE) and some very small groups explicitly calling for a socialist revolution. These received about 9 to 10 percent of the vote in May (depending on which groups you include). Their share fell to about 5 percent in June.
Concentrating
While June was not a run-off election, it had that effect. In May the seven parties who earned seats in parliament (by gaining more than 3 percent of the vote) received 81 percent of the total votes cast. In June that number jumped to 94 percent in elections that had very similar numbers of total votes cast.
In May the party that came in eighth, the Ecologist Greens, received 185,000 votes. In June, the eighth place was earned by an even more peripheral group called Recreate Greece which earned only 98,000 votes.
The future of PASOK
The center-left party PASOK further declined from 13 percent to 12 percent of the votes and from 41 to 33 seats in a 300 member parliament. This is a remarkable eclipse. PASOK first came to power in 1981 and for much of the 80s and 90s controlled the government. It was the home for the liberal elements of the Greek scene. As recently as June 2009, it led the Greek elections for the European parliament with 36 percent of the vote.
PASOK was fatally linked in voters’ minds with the bailout agreements. That might also be true for New Democracy (the party of the new prime minister) but PASOK’s current leader, Evangelos Venizelos, a former professor of Constitutional Law and holder of a doctorate degree, was the Finance Minister when the bailout agreements were negotiated and thus is (literally) the face of the austerity program. This is ironic, because if there was a party that might have credibly claimed the ability to lead in a new and responsible direction it would have been PASOK.
Political parties in Greece form, reform, split, merge and die far more frequently than in the U.S. or Brittan, but this still raises some key questions about the future of the center left. The new leading party of the left, Syriza seems more like an unstable agglomeration than a party – even in Greek terms. It is positioned on the left edge of center left, not a comfortable place. Will it become establishment, or will it split and there be a flow of deputies and voters back to PASOK?
The new government
New Democracy leads a three-party coalition. The new prime minister, is the 61-year-old Antonis Samaris who takes the job for the first time. An economist with an MBA from Harvard, he has as long history in politics, having been both Finance and Foreign Ministers in previous governments.
He also has a history of disrupting governments, being largely blamed for the fall of his own party’s government in 1993, and further split his own party by a long running dispute (now allegedly healed) with his rival for power, Dora Bakoyannis, who he managed to actually expel from New Democracy a few years ago.
The other parties in his coalition include the diminished PASOK and the leftist party Democratic Left. Those three earned 48 percent of the vote (up from 38 percent in May) and hold 179 seats in the 300 member parliament. However, neither PASOK nor Democratic Left have any ministers in the new cabinet. This is, of course, very different than most parliamentary coalitions where the other party leaders commonly demand a senior cabinet post or posts as the price of cooperation.
The rumor is that PASOK members wanted to be in the cabinet, but the public statements are that both of the junior partners did not want any senior ministries. This certainly seems to position both junior partners to be able to repudiate any tough agreements while still claiming credit for any moderation of the austerity program.
In addition to the cabinet there may be a “negotiating team” with members from all three parties, that may demand a two-year extension on the bailout terms, but, note carefully, is not asking to leave the Euro nor to repudiate all of Greece’s debts.
On Friday, the Greek soccer team will meet the county’s main financial opponent, Germany, in a Euro 2012 match. The irony is that this direct, physical clash may be conducted with more sportsmanship and certainly clearer rules than the far more critical financial showdown that will play out over the next months.